The following are comments on Monday from finance officials in Istanbul for the Group of Seven, IMF and World Bank meetings.
NOBEL ECONOMIST JOSEPH STIGLITZ: ON IMF AND GLOBAL RESERVES SYSTEM
The (current) system is inherently unstable and also has a problem of inequity because you have developing countries lending trillions of dollars to the United States at zero interest rates. It's a form of foreign aid to the United States.
All this says we ought to have another system. (he has proposed a new reserve system not based on U.S. dollar)
Expanding these (IMF) flexible credit lines is a mechanism of providing a kind of liquidity insurance but doesn't solve the other problems I described and has to be automatic ... for most countries the worry is that it won't be the case.
The flexible credit lines are a move in the right direction but they don't solve the problem.
We welcome the expansion of the SDR (Special Drawing Right) that happened in the London meeting and it's already being helpful in some very specific countries. The SDR allocation has institutional limitations. The largest recipient of the SDR is the United States. We are not the country that needs the reserves.
My own view is that I support some other mechanisms that are described in our report.
The IMF response to this crisis has been much more positive than in the past.
ECB'S LORENZO BINI SMAGHI ON CHINA, DOLLAR PEGS:
The best way (forward) is that China starts adopting its own monetary policy and detaching itself from the Fed's policy.
Systemically important countries should start implementing their own policies and depegging themselves from the dollar.
ON CENTRAL BANKS' APPROACH TO MONEY, CREDIT GROWTH
You should try to understand how to calibrate your monetary policy.
When you observe fast growth of money and credit you should start doubting if your policy is right.
In Europe we found that looking at money and credit aggregates was very useful and at a certain point we found that even though inflation looked under control, other things were not going at the right speed, so we adjusted policy to take that into account.
ON LESSONS OF CRISIS:
Maybe parts of the advanced world are not fully accepting of the implications of globalisation.
Maybe some parts of the advanced world have to grow less to let other parts grow faster. Some parts of the advanced world have accepted we have to grow less but some parts have not accepted that and are trying to grow more by borrowing on the future.
Globalisation has led to a scarcity of resources ... in some parts of the world the price of gasoline is not sustainable and has not adjusted, in the expectation nothing will change ... Until part of the advanced world realises it has to organise itself to grow less we will not get out of the woods.
Maybe some advanced economies have to revisit their model of growth (otherwise) the incentives for short termism will still be there ... and pressures will still be there to get a bit more growth we cannot have.
What was missing in a society where everyone agreed on the model of growth and short termism, was someone to raise their hand and say 'it's not sustainable' ... (We) need someone to look medium term and that can only be an institution that can look beyond electoral deadlines, and this can be a central bank.
On certain issues you have to give priority to the medium term, so strengthening the independence of central banks all over the world is important for monetary policy but also for supervision.
If you look around the world maybe those countries where supervision was in (the hands of) central banks on average did better than those countries (where it wasn't).
ON IMF SUPERVISION OF SUPERVISORS:
Supervisors should be monitored and supervised themselves. The IMF has surveillance over everything except supervisors and the way supervisors supervise.
I would like the article 4 process to be adopted also on the way supervision is implemented.
FRENCH ECONOMY MINISTER CHRISTINE LAGARDE ON CURRENCIES, INTERVIEW WITH CNBC
The G7 was a good meeting, we talked about a lot of things including particularly the macro economic situation and how we address the issue of growth. Growth is clearly top on the list at the moment ... which is probably why we did not spend as much time as you would have expected on currencies. But it is clearly the fact that we all want a strong dollar. (U.S. Treasury Secretary) Timothy Geithner has indicated that ... so we all welcome this strong dollar. The section of the communique that deals with exchanges is relatively standard.
(Doesn't it hurt exporters?)
The higher that currency, the more difficult it is to compete on a currency basis which is why they have to really improve their competitiveness and work very hard. The currency issue is one that will have to be dealt with clearly and the time will come.